Things to look out for when buying and planning to duplex down

Things to look out for when buying and planning to duplex down

Member since 2020 · 34 posts · 10 votes

Hi all - I'm considering buying into a house hack situation, a 2 or 3 unit (most likely 2) building that has the potential to duplex.  I would live in the duplexed unit and rent the other(s).  I'm also open to duplex up, but I'm assuming this is likely more difficult.  Please correct me if that's an incorrect assumption!

Obviously I'd love to keep the costs to a minimum, so I"m wondering what things an experienced eye would look out for in the showing/buying process to identify potential problems or advantages a property may have compared to other options?

It seems like finding a building that already has an "in-law" unit in the basement is a great start.  It's already finished, so I'm assuming one of the main jobs needing to be done is building the interior stairs.  It's not very important to me to add an additional bathroom down there if there already is not one.  Nor would I care to add a kitchen.  I would just like additional comfortable living space down there, and probably a sectioned off area for the laundry, etc.   

Also, what would a ballpark be on this work if all I needed to do was build the staircase and possibly add some walls?

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Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
3y

Duplex down is not cheap. Your looking at around an $80k project I recently had a client do it with multiple bids. You do not want duplex down without permits can cause major structural issues, you need dig down, safely cut big enough windows and foundation/walls usually need work to not let moisture in. 

Duplexing up with permits is not cheap either but lots of people duplex up with no permits ($20-30k job) and get away with it. I have had a few clients do BRRR this way.

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  • Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes
    3y

    @Ryan Monty

    This is a good question for @Samuel Pavlovcik and @Jonathan Klemm.

  • Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    3y

    Duplex down is not cheap. Your looking at around an $80k project I recently had a client do it with multiple bids. You do not want duplex down without permits can cause major structural issues, you need dig down, safely cut big enough windows and foundation/walls usually need work to not let moisture in. 

    Duplexing up with permits is not cheap either but lots of people duplex up with no permits ($20-30k job) and get away with it. I have had a few clients do BRRR this way.

  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    3y

    I second @Henry Lazerow numbers especially those big basement windows $$$. They add so much natural light and you'll need it to command good rents. 

  • Architect · Chicago, IL · Member since 2020 · 214 posts · 236 votes
    3y

    @Ryan Monty, Based on your notes, there are definitely a few things you had mentioned that will save you mponey including Not adding any bathrooms or a Kitchen. By avoiding adding any plumbing fixtures, you can avoid a costly requirement for a Water Service Upgrade.

    Finding a basement with a minimum 7'-0" finished ceiling height would also be a big concern, as mentioned by @Henry Lazerow, digging the basement down can be a pretty costly job, especially if it needs more than just a few inches.

    When finishing a basement as habitable space, you will also need to provide the required Natural Light and Ventilation for all new "Habitable spaces" including bedrooms and living spaces. This means you would need to replace Glass Block for operable windows, and potentially add more windows depending on what is existing and the size of the spaces they are serving. This is obviously more expensive with a masonry building compared to frame; however, can still be a significant issue. One additional concern for "Natural Light and Ventilation" is the distance from the exterior wall to the property line, as you will need a minimum of 2.5' from the window to your propertyline for remodeling work (or 3.0' for additions/new construction) in order for the windows to be counted towards the "Natural light and Ventilation" requirements. This can obviously make an impact to how the space/rooms are orientated.

    One concern with finding a building which already has the "in-law" suite is that the work may have been done illegally, without a permit, which could cause issues down the road if you are looking to do any other remodeling within the building. If work was done illegally, without a permit, when we obtain a new permit for the propsoed remodeling, new stair, etc. they can require All work done illegally to be brought up to current codes.

  • Jonathan KlemmBusiness Member
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    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    3y

    Thank you @Paul De Luca!

    Hey @Ryan Monty - There is a lot to unpack there. Generally speaking, I love where you head is at and definitely think you should move forward with a 2-3 unit house hack purchase. From my own experience, a 2 unit will be easier if you are looking at the nw side of Chicago. I always pondered doing a duplex for some of my first properties because the idea of it sounds great, but the actual ROI is not really that.

    I personally decided to wait until further down the road to utilize my unused basement space, it just made more sense to get to the next deal instead of tying up all the capital.

    As far as cost, I think you would be every bit of $100/SF with some big "what ifs" regarding the foundation, water service, and electrical service.

    Happy to connect and help you out any way I can!

  • Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    3y

    @Ryan Monty I had a client do this in Forest Park a few years ago, and it was a big job for sure. He ended up doing a water proofing system (8k), new drywall, interior spiral staircase, etc. I don't know his final spend, but even with him doing a lot of the work and GC'ing the project himself, this still cost north of 30k. He didn't have to update the electrical, plumbing or hvac, and he didn't have to dig down either.... so that just shows how fast the money can flow. 

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